By Noel Randewich and Alun John
(Reuters) – U.S. stock futures declined in volatile trading on Wednesday after President Donald Trump claimed he won the U.S. elections despite millions of votes not yet being counted, creating the specter of a protracted legal battle to resolve the Result triggered.
Democratic Challenge Joe Biden had previously said he was confident of winning.
“Markets can take almost anything as long as it is safe,” said Andrea Cicione, Head of Strategy at TS Lombard in London.
“If this went to the Supreme Court, the results would take even longer, and that’s probably the worst case scenario of any.”
“We honestly won,” Trump told White House supporters, adding that the election was “a scam on the American public,” with no evidence to support the claim.
Biden’s optimism was based on his hopes for victories in the so-called “Blue Wall” states of Michigan, Wisconsin and Pennsylvania, which Trump sent to the White House in 2016, although the vote count there could stretch for hours or days.
His expectations of a pivotal early win faded when television networks forecast the president had won in Florida, a state that Trump would have loved, and took the lead in Ohio and Texas.
The surprisingly stronger initial results for Trump boosted U.S. stock futures early in the session, pushed longer-dated U.S. Treasury bond yields from their five-month highs, and weighed heavily on the Mexican peso and Chinese yuan.
Bob Shea, chief executive officer at TrimTabs Asset Management in New York, said that while Trump was performing better, people would have used “Trump is good for the market” by default. So why not just buy it now and get to the point? “
Chart – “Biden” shares versus “Trump” shares: https://fingfx.thomsonreuters.com/gfx/mkt/yzdpxabbovx/biden%20vs%20trump%20shares.PNG
Investors have said for months that they are in favor of a definitive, quick fix to the choice. A speedy election settlement would pave the way for an agreement on a stimulus package to help the damaged US economy.
Early results also suggested that the Democrats were less likely to take the Senate from Republicans in a so-called blue wave, which could mean a more modest incentive.
US stock index futures crashed on election night of 2016 as Trump celebrated an angry victory over Democrat Hillary Clinton. The next day, however, the so-called “Trump rally” began, with the S&P 500 rising 5% in one month, driven by pledges of massive tax cuts and financial deregulation.
Graphic – S&P 500 in the first few terms: Trump vs Obama: https://fingfx.thomsonreuters.com/gfx/mkt/ygdvznodzvw/Pasted%20image%201604467379861.png
Graphic markets under different presidents in history: https://graphics.reuters.com/USA-ECONOMY/MARKETS/qmyvmjrgbpr/index.html
(Adaptation by Sam Holmes & Shri Navaratnam)